Pricing See-Saw is a Sellers Biggest Challenge
June 6th, 2014 by Geoff Baldwin
History proves that maximum interest in a property listing happens in its first few weeks on the market so it is critical that the pricing strategy is spot on from day one or this initial thrust will be wasted according to RE/MAX WA Managing Director, Geoff Baldwin.
“Unfortunately with the majority of new listings the pricing strategy is not in sync with the time when maximum interest is happening”, Mr Baldwin said.
“We refer to it as the Pricing See-Saw whereby, while buyer interest is at its peak at the beginning of the listing, typically the price is such that nobody is compelled to go ahead and make an offer.
“Unfortunately, when no offers are forthcoming the price is adjusted to lift interest but in most cases it is too late and the listing stalls.
“A study of listings that are on the market for more than 6 weeks shows that, on average, the eventual sales price will reduce by around half a percent for each additional week until it sells.
“One of the most asked questions when a buyer likes a property is “How long has it been for sale?” and buyers love it when a property has been on for a long period because they feel they have more negotiation power and, they are often right.
“Sellers are afraid of under-pricing however there are several sophisticated and proven strategies to ensure that maximum price is achieved but also that potential buyers are not scared off by a high fixed price.
“It must be understood that the pricing strategy is not a component of selling the property, it is a critical component of marketing to attract buyers to view the property.
“Once a buyer has come to see the house the marketing, including the pricing strategy, has done its job and from that time onwards the buyer either likes the property or doesn’t.
“Marketing is designed to attract buyers to view properties so if the pricing component of the marketing is wrong then buyer enquiry will be scarce or it will come from the wrong buyer pool.
“For a buyer to fall in love with a property they must first see that property and one of the biggest barriers to that happening is the asking price so sellers should ensure the agent they choose is able to explain how they will overcome this challenge and what strategy they propose to achieve maximum viewings and a great sale price”, Mr Baldwin said.